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Out of the loop question - I've read that transaction costs have risen drastically and it's now around $10 per transaction. Doesn't this mean it's essentially

Out of the loop question - I've read that transaction costs have risen drastically and it's now around $10 per transaction. Doesn't this mean it's essentially failing in its goal to work as a currency? Why do people still buy it / believe in it?

nkuttler 6y ago
The mempool is pretty empty, transactions costs are very low at the moment. I think there was a brief spike in mempool usage and fees around the time paypal announced their bitcoin option, but that didn't last.
- The_Colonel 6y ago
  Ah, interesting. If bitcoin is adopted more and more transactions will come, will the problem return again (and perhaps not just as spike). Or is there some technological solution?
  - mateuszf 6y ago
    https://en.wikipedia.org/wiki/Lightning_Network https://en.wikipedia.org/wiki/Lightning_Network
    - arcticbull 6y ago
      Nobody uses it, it locks up your money and if an intermediate node loses power or network connectivity sorry for your loss.
      - Fnoord 6y ago
        > loses power or network connectivity Ah, now I understand the name "Lightning Network". Cheers!
  - arcticbull 6y ago
    There isn’t a technical solution anyone in the community agrees on, and hadn’t in over 12 years. The only proposal is “layer 2” which is agnostic to the underlying asset and would function just as well with gold.
deleted 6y ago
[deleted]
nmlnn 6y ago
Fee rates over the past week: https://mempool.space/graphs#1w https://mempool.space/graphs#1w
input_sh 6y ago
Think of it as gold. Almost nobody uses it as a currency. It's an investment whose value will hopefully rise, at which point you're just gonna convert it for a "real" currency.
- arcticbull 6y ago
  Think of it as gold whose storage cost scales linearly with its market price. Instead of with whatever a warehouse and a few kalashnikovs costs. Block reward welfare reduction scales linearly with market price.
dnautics 6y ago
If you wanted to transfer 100k between two banks in, say, 1900 via $5000 bank notes, how much do you suppose it would have cost you? Based on that cost would you say the dollar was failing as a currency in 1900?
- arcticbull 6y ago
  What It’s 2020 an ACH transfer costs in bulk about 1/10th of a cent and has no practical cap.
  - rlpb 6y ago
    Now try doing that internationally.
    - arcticbull 6y ago
      Sure there’s tons of options. TransferWise, for one. Wire transfers. InteractiveBrokers. And they’re actually quite affordable. This has been a solved problem for a long time.
      - rglullis 6y ago
        Now try doing that without a middleman.
        arcticbull 6y ago
        Try doing that with Bitcoin lol, no merchants accept Bitcoin on either side and nobody gets paid in it so you have to convert dollars on one side to crypto for a 1-2% fee, transfer it for $10 fee to an exchange in the receiving country and then convert back to local units for a 1-2% fee. Also, why. It makes no difference.
        rglullis 6y ago
        Are you sure you got the right username? You sound more of a bear than a bull. Back in 2014 I was consistently selling BTC to friends in Brazil at a rate that made perfect sense for them and even above the BRL-USD rate. This year I paid for all of my domain renewals using BTC on namecheap. Hundreds of dollars. You can go to a service I provide right now and you can purchase the services with ethereum and ERC20 tokens. I also accept Raiden, which can make the transaction cost virtually zero. I will reiterate what I asked in first comment: instead of just arguing with the amygdala, is there any chance you can establish a set of parameters and values that will make crypto (not necessarily Bitcoin, not necessarily Ethereum) something you consider worthy of a experiment, or are you forever going to believe that the status quo is the best we can do? > Also, why. It makes no difference. You playing the cynical permabear who sees no point in building on blockchain tech is no different from a corporate drone who does not understand why people work on Free software without any immediate financial reward. Even if Bitcoin fails, it has already paved the way for something that won't. You may not care about your freedom and self-reliance, but it ABSOLUTELY makes a difference.
deleted 6y ago
[deleted]
reedf1 6y ago
Do you know about visa/mastercard transaction fees? Someone has to do the work of performing the transaction and bitcoin achieves this with a functioning market - high fees -> high mining rewards -> more miners -> lower fees -> less miners -> loop back
- arcticbull 6y ago
  I recommend learning more about the payments space before trying to reinvent it. US interchange is about 1.8% and that’s largely returned to buyers in the form of reward programs. The remainder is split between profit and the cost to originate and service loans. This isn’t a bad deal, at all, as studies show merchants enjoy 20% larger ticket sizes and don’t have to fear theft of cash or scammers taking their crypto - while customers enjoy protections and rewards. In Europe interchange is capped at 0.3% for credit and 0.2% for debit, so of course they Don’t have reward programs. A Bitcoin transaction costs $10 in fees and $80 in electricity so you’d need an average ticket size of $30000 in Europe ($5000 in the US net of reward) to make BTC more efficient.
  - octocop 6y ago
    > This isn’t a bad deal In what context? I've read some of the posts that you've made in this thread and at this point i'm almost certain that you either work for a bank or for a credit card provider. You are glowing.
    - arcticbull 6y ago
      Nope, I worked in fintech for years though, so have a solid understanding of the space It’s not bad in the sense that merchants get larger average ticket sizes and avoid a lot of risks, customers get insurances and protections including chargebacks, the ability to defer and consolidate their cash flow via 1 month no interest loan.
  - nmlnn 6y ago
    I recommend learning more about the bitcoin payments space before trying to criticise it. A bitcoin transaction does not cost $10 (https://mempool.space/graphs#1w https://mempool.space/graphs#1w). If you are going to add in your (completely made up?) estimate of mining costs to a bitcoin transaction you would need to include the costs of the entire fiat payments and settlement infrastructure to the costs of credit card transactions. From gold mined and stored by central banks all the way through to the energy used by the back offices of commercial banks all over the world.
ur-whale 6y ago
Bitcoin is still called a currency because that's more or less what its creator called it in the seminal paper [1]. However, 10 years later, Bitcoin has proved to be a new kind of financial instrument, with extremely useful properties unmatched by any other kind of asset. At this point, of all the things Bitcoin can do that other financial assets can't (pseudo-anonymous, extremely hard to confiscate, can be moved quasi instantaneously across borders, demonstrably finite supply, can be use as a settlement layer for large players, etc ...) the one aspect that I believe attracts people is "store of value". Many people contest that last property citing high volatility, and they're correct if your window is less than 4 years. But for folks who play the long game, supply and demand tells a verycompelling story for Bitcoin. Calling Bitcoin a "currency" at this point is essentially incorrect and just creates confusion. [1] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- tnbalsam 6y ago
  I think the above properties define a currency. Currencies are tangible, generally recognizable and agreed-upon value containers to be traded for goods and services. Calling it anything else at this point, I'd contend, would likely be essentially incorrect of its own merits, and I do think trying to separate it out would create confusion as it really does no good at all. It is certainly a special kind of currency, but no different than some of the other universal currencies that we've had in the past, really, at all.
knocte 6y ago
That's if you transact on chain. These days people are switching to off chain, which brings almost zero fees and instant settlement.
- deleted 6y ago
  [deleted]

nkuttler 6y ago

The mempool is pretty empty, transactions costs are very low at the moment. I think there was a brief spike in mempool usage and fees around the time paypal announced their bitcoin option, but that didn't last.

The_Colonel 6y ago
Ah, interesting. If bitcoin is adopted more and more transactions will come, will the problem return again (and perhaps not just as spike). Or is there some technological solution?
- mateuszf 6y ago
  https://en.wikipedia.org/wiki/Lightning_Network https://en.wikipedia.org/wiki/Lightning_Network
  - arcticbull 6y ago
    Nobody uses it, it locks up your money and if an intermediate node loses power or network connectivity sorry for your loss.
    - Fnoord 6y ago
      > loses power or network connectivity Ah, now I understand the name "Lightning Network". Cheers!
- arcticbull 6y ago
  There isn’t a technical solution anyone in the community agrees on, and hadn’t in over 12 years. The only proposal is “layer 2” which is agnostic to the underlying asset and would function just as well with gold.

deleted 6y ago

[deleted]

nmlnn 6y ago

Fee rates over the past week: https://mempool.space/graphs#1w https://mempool.space/graphs#1w

input_sh 6y ago

Think of it as gold. Almost nobody uses it as a currency. It's an investment whose value will hopefully rise, at which point you're just gonna convert it for a "real" currency.

arcticbull 6y ago
Think of it as gold whose storage cost scales linearly with its market price. Instead of with whatever a warehouse and a few kalashnikovs costs. Block reward welfare reduction scales linearly with market price.

dnautics 6y ago

If you wanted to transfer 100k between two banks in, say, 1900 via $5000 bank notes, how much do you suppose it would have cost you? Based on that cost would you say the dollar was failing as a currency in 1900?

arcticbull 6y ago
What It’s 2020 an ACH transfer costs in bulk about 1/10th of a cent and has no practical cap.
- rlpb 6y ago
  Now try doing that internationally.
  - arcticbull 6y ago
    Sure there’s tons of options. TransferWise, for one. Wire transfers. InteractiveBrokers. And they’re actually quite affordable. This has been a solved problem for a long time.
    - rglullis 6y ago
      Now try doing that without a middleman.
      - arcticbull 6y ago
        Try doing that with Bitcoin lol, no merchants accept Bitcoin on either side and nobody gets paid in it so you have to convert dollars on one side to crypto for a 1-2% fee, transfer it for $10 fee to an exchange in the receiving country and then convert back to local units for a 1-2% fee. Also, why. It makes no difference.
        rglullis 6y ago
        Are you sure you got the right username? You sound more of a bear than a bull. Back in 2014 I was consistently selling BTC to friends in Brazil at a rate that made perfect sense for them and even above the BRL-USD rate. This year I paid for all of my domain renewals using BTC on namecheap. Hundreds of dollars. You can go to a service I provide right now and you can purchase the services with ethereum and ERC20 tokens. I also accept Raiden, which can make the transaction cost virtually zero. I will reiterate what I asked in first comment: instead of just arguing with the amygdala, is there any chance you can establish a set of parameters and values that will make crypto (not necessarily Bitcoin, not necessarily Ethereum) something you consider worthy of a experiment, or are you forever going to believe that the status quo is the best we can do? > Also, why. It makes no difference. You playing the cynical permabear who sees no point in building on blockchain tech is no different from a corporate drone who does not understand why people work on Free software without any immediate financial reward. Even if Bitcoin fails, it has already paved the way for something that won't. You may not care about your freedom and self-reliance, but it ABSOLUTELY makes a difference.

deleted 6y ago

[deleted]

reedf1 6y ago

Do you know about visa/mastercard transaction fees? Someone has to do the work of performing the transaction and bitcoin achieves this with a functioning market - high fees -> high mining rewards -> more miners -> lower fees -> less miners -> loop back

arcticbull 6y ago
I recommend learning more about the payments space before trying to reinvent it. US interchange is about 1.8% and that’s largely returned to buyers in the form of reward programs. The remainder is split between profit and the cost to originate and service loans. This isn’t a bad deal, at all, as studies show merchants enjoy 20% larger ticket sizes and don’t have to fear theft of cash or scammers taking their crypto - while customers enjoy protections and rewards. In Europe interchange is capped at 0.3% for credit and 0.2% for debit, so of course they Don’t have reward programs. A Bitcoin transaction costs $10 in fees and $80 in electricity so you’d need an average ticket size of $30000 in Europe ($5000 in the US net of reward) to make BTC more efficient.
- octocop 6y ago
  > This isn’t a bad deal In what context? I've read some of the posts that you've made in this thread and at this point i'm almost certain that you either work for a bank or for a credit card provider. You are glowing.
  - arcticbull 6y ago
    Nope, I worked in fintech for years though, so have a solid understanding of the space It’s not bad in the sense that merchants get larger average ticket sizes and avoid a lot of risks, customers get insurances and protections including chargebacks, the ability to defer and consolidate their cash flow via 1 month no interest loan.
- nmlnn 6y ago
  I recommend learning more about the bitcoin payments space before trying to criticise it. A bitcoin transaction does not cost $10 (https://mempool.space/graphs#1w https://mempool.space/graphs#1w). If you are going to add in your (completely made up?) estimate of mining costs to a bitcoin transaction you would need to include the costs of the entire fiat payments and settlement infrastructure to the costs of credit card transactions. From gold mined and stored by central banks all the way through to the energy used by the back offices of commercial banks all over the world.

ur-whale 6y ago

Bitcoin is still called a currency because that's more or less what its creator called it in the seminal paper [1]. However, 10 years later, Bitcoin has proved to be a new kind of financial instrument, with extremely useful properties unmatched by any other kind of asset. At this point, of all the things Bitcoin can do that other financial assets can't (pseudo-anonymous, extremely hard to confiscate, can be moved quasi instantaneously across borders, demonstrably finite supply, can be use as a settlement layer for large players, etc ...) the one aspect that I believe attracts people is "store of value". Many people contest that last property citing high volatility, and they're correct if your window is less than 4 years. But for folks who play the long game, supply and demand tells a verycompelling story for Bitcoin. Calling Bitcoin a "currency" at this point is essentially incorrect and just creates confusion. [1] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

tnbalsam 6y ago
I think the above properties define a currency. Currencies are tangible, generally recognizable and agreed-upon value containers to be traded for goods and services. Calling it anything else at this point, I'd contend, would likely be essentially incorrect of its own merits, and I do think trying to separate it out would create confusion as it really does no good at all. It is certainly a special kind of currency, but no different than some of the other universal currencies that we've had in the past, really, at all.

knocte 6y ago

That's if you transact on chain. These days people are switching to off chain, which brings almost zero fees and instant settlement.

deleted 6y ago
[deleted]